After setting an all-time value record of $6.16 billion last year, U.S. beef exports have remained strong in early 2014. Through February, exports totaled 183,700 metric tons (mt) – a 6% increase in volume over the same period last year. At $994.8 million, export value is 14% ahead of last year's record pace.
Success in the international markets continues to be well-illustrated by the remarkable growth of beef export value on a per-head basis, says Doug Bear of the Iowa Beef Industry Council. Last year, export value on per head of fed slaughter equated to $245 – up 13% from the previous year and more than double the per-head average from 2009. So far in 2014, the per-head average is $246.13, he notes.
This year's fast start is tempered somewhat, however, by concerns about tight supplies and high beef prices. While the international markets continue to deliver excellent returns for U.S. producers, it is important to keep in mind that some destinations can be very price-sensitive. Exports to Mexico, for example, are up 26% in volume (37,638 mt) and a remarkable 40% in value ($182.9 million) from a year ago. Strong demand from Mexico helped fuel round prices to $2.90 per pound in Jan. and prices surged again to $3.15 per pound in March, up 46% from last year. But U.S. Meat Export Federation regional director Chad Russell cautions that maintaining this pace throughout the year will be difficult.
Maintaining this pace throughout 2014 will be difficult
"The price point is going to create some challenges for Mexican consumers in terms of affordability," Russell said. "The market is short on domestic beef due to the drought Mexico has suffered in recent years. So if our prices were at historical levels it would be a great opportunity to ship more product, but at this point our prices are well above those levels."
Price is also a factor regarding exports to Canada, which are down 25% in volume (23,595 mt) and 21% in value ($157.3 million) from a year ago. But in this case, the price challenge is mostly tied to exchange rates. The Canadian dollar has steadily declined against the U.S. dollar over the past 18 months, with its purchasing power falling about 11% during that time. Canada's beef production has also rebounded this year, with year-over-year cattle slaughter up 7.5% in the first quarter.
Benefiting from expanded market access and demand for high-quality U.S. beef, Japan and Hong Kong continue to lead export growth. Last year Japan reclaimed its position as the top destination for U.S. beef exports and it has continued to perform well. Through February, exports are up 51% in volume (30,032 mt) and 34% in value ($184.7 million) from a year ago. It should be noted, however, that exports to Japan under the expanded 30-month cattle age limit really gained momentum in March of last year, so smaller year-over-year gains are anticipated going forward.
Some foreign customers are buying less beef this year
Hong Kong also expanded access for U.S. beef last year, accepting bone-in cuts from under-30-month cattle and boneless beef from cattle of all ages for the first time since 2003, and the results have been excellent. After shattering previous records in 2013, exports to Hong Kong through February are up another 44% in volume (22,835 mt) and 69% in value ($144.7 million) from a year ago.
Exports to South Korea are running lower in volume (19,250 mt, -14%) but higher in value ($133.8 million, +17%) so far this year, while exports to Taiwan are off to a sluggish start – down 30% in volume (4,023 mt) and 25% in value ($32.1 million).
U.S. beef continues to grow its presence in Central and South America, with exports to the region up 10% in volume (5,568 mt) and 15% in value ($23.7 million) compared to the record pace of 2013. Recently implemented free trade agreements have helped Panama and Colombia emerge as promising markets, joining mainstay destinations Chile, Peru and Guatemala. U.S. beef also recently regained access to Ecuador for the first time since 2003.
Russia and China markets are still closed to U.S. beef
Russia suspended imports of U.S. beef in February 2013 over the use of beta agonists and the market remains closed. Russia also recently banned beef from Australia. U.S. beef also lacks access to mainland China, but negotiating teams have set July of this year as a target date for opening the market.
Russell provides the following chart highlighting the increase of beef export value per head of fed slaughter from 2009 -2013.
About the Iowa Beef Industry Council: The Iowa Beef Industry Council is funded by the $1-per-head beef checkoff. Checkoff dollars are invested in beef promotion, consumer information, research, industry information and foreign market development, all with the purpose of strengthening beef demand. For more information, visit www.iabeef.org.